Unemployment insurance experience rating
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An unemployment insurance experience rating, or experience rating, is a term that refers to a tax evaluation tool used by state unemployment insurance programs that allows states to collect unemployment taxes from employers according to the amount of unemployment insurance benefits drawn by their former employees. Experience ratings determine the state unemployment tax rates employers must pay. Employers with low experience ratings pay less in state unemployment taxes than employers with high experience ratings.[1]
Background
Under the joint federal-state unemployment insurance program, the federal government oversees the general administration of state unemployment insurance programs. The states control the specific features of their unemployment insurance programs, such as eligibility conditions, length of benefits, and experience ratings.
New employers begin paying into the unemployment insurance system at the new employer rate. During this period, employers pay a consistent, state-determined unemployment tax rate. Employers receive an experience rating after they have paid unemployment insurance taxes for a set time period (usually a few years, depending on state laws). Experience ratings correspond to a range of unemployment tax percentages on the wage base (taxable employee wages) in each state.
The more unemployment claims an employer has, the higher their state unemployment tax (SUTA) rate. For example, in Arizona, employers with the lowest experience rating pay a 0.08% tax on the first $7,000 paid to an employee. Employers with the highest experience rating pay a 20.6% tax on the first $7,000 paid to an employee.[2][3]
In Nebraska and Rhode Island, wage bases are also adjustable depending on an employer's experience rating. For example, in Nebraska, most employers pay unemployment taxes on the first $9,000 paid to an employee. Employers with the highest experience ratings pay the top unemployment tax rate (5.4%) on the first $24,000 paid to an employee.[2][3]
The federal government does not use an experience-rated system for Federal Unemployment Tax Act (FUTA) taxes.
Unemployment tax ranges by state
SUTA tax amounts vary by state. The following list provides a summary of the SUTA tax amounts across states:[3][2][4]
- The new employer rate ranged from 0.41% in South Carolina to 4.1% in New York as of August 2024.
- Regular rates ranged from 0% for employers with the lowest experience rating in seven states up to 20.93% of each employee's base wage in Arizona for employers with the highest experience ratings as of January 2024.
- Arkansas, California, Florida, and Tennessee had the lowest wage bases at $7,000, and Washington had the highest wage base at $68,500 as of January 2024.
The table below outlines regular SUTA tax rate ranges for experienced employers and wage bases and new employer SUTA tax rates for all 50 states as of 2024.
| State unemployment tax rates | |||
|---|---|---|---|
| State | SUTA new employer tax rate | Employer tax rate range[5] | SUTA wage bases |
| Alabama | 2.70% | 0.2% – 6.8% | $8,000 |
| Alaska | Standard rate 1.66% | 1% – 5.4% | $49,700 |
| Arizona | 2.00% | 0.08% – 20.93% | $8,000 |
| Arkansas | 2.025% (including 0.125% administrative assessment) | 0.225% – 10.125% | $7,000 |
| California | 3.40% | 1.5% – 6.2% | $7,000 |
| Colorado | 3.05% | 0.81% – 12.34% | $23,800 |
| Connecticut | 2.5% | 1.1% – 7.8% | $25,000 |
| Delaware | 1% | 0.3% - 6.5% | $10,500 |
| Florida | 2.70% | 0.1% – 5.4% | $7,000 |
| Georgien | 2.70% | 0.06% – 8.1% | $9,500 |
| Hawaii | 3.00% | 1.7% - 6.2% | $59,100 |
| Idaho | 1.231% (including the workforce rate, UI rate, and admin rate) | 0.352% – 5.4% | $53,500 |
| Illinois | 3.95% | 0.85% – 8.65% | $13,590 |
| Indiana | 2.50% | 0.5% – 11.2% | $9,500 |
| Iowa | 1.00% | 0.0% – 7% | $38,200 |
| Kansas | 2.70% | 0.1% – 6% | $14,000 |
| Kentucky | 2.70% | 0.3% – 9.0% | $11,400 |
| Louisiana | Varies | 0.09% – 6.2% | $7,700 |
| Maine | 2.32% (including the CSSF rate and UPAF rate) | 0.28% – 6.03% | $12,000 |
| Maryland | 2.6% | 0.3% – 7.5% | $8,500 |
| Massachusetts | 1.87% | 0.56% – 8.62% | $15,000 |
| Michigan | 2.70% | 0.06% – 10.3% | $9,500 |
| Minnesota | Varies | 0.1% – 9.00% | $42,000 |
| Mississippi | 1.0% (1st year) | 0.0% – 5.4% | $14,000 |
| Missouri | 1.0% for nonprofits and 2.376% for mining, construction, and all other employers | 0.0% – 5.4% | $10,000 |
| Montana | Varies | 0.0% – 6.12% | $43,000 |
| Nebraska | 1.25% | 0% – 5.4% | $9,000 |
| Nevada | 2.95% | 0.25% – 5.4% | $40,600 |
| New Hampshire | 1.7% (minus any Fund Reduction or Plus any Emergency Power Surcharge in place for the applicable quarter) | 0.1% – 7.5% | $14,000 |
| New Jersey | 3.1% (including the 0.1175% Workforce Development and Supplemental Workforce Funds) | 1.2% – 7% | $42,300 |
| New Mexico | 1.0% or the industry average rate, whichever is greater | 0.33% – 5.4% | $31,700 |
| New York | 4.1% (including the subsidiary tax rate of 0.625% and the reemployment tax of 0.075%) | 2.025% – 9.825% | $12,500 |
| North Carolina | 1.00% | 0.06% – 5.76% | $31,400 |
| North Dakota | 1.09% (positive-balanced employers) or 6.08% (negative-balanced employers) | 0.08% – 9.68% | $43,800 |
| Ohio | 2.70% | 0.4% – 10.1% | $9,000 |
| Oklahoma | 1.50% | 0.3% – 9.2% | $27,000 |
| Oregon | 2.40% | 0.9% – 5.4% | $52,800 |
| Pennsylvania | 3.822% | 1.419% – 10.3734% | $10,000 |
| Rhode Island | 1.0% (including the 0.21% Job Development Assessment) | 1.1% – 9.7% | $29,200 |
| South Carolina | 0.41% (including 0.06% Contingency Assessment) | 0.06% – 5.46% | $14,000 |
| South Dakota | 1.2%, plus 0.55% Investment Fee | 0% – 8.8% | $15,000 |
| Tennessee | 2.70% | 0.01% – 10% | $7,000 |
| Texas | 2.7% (or the industry average rate, whichever is greater) | 0.25% – 6.25% | $9,000 |
| Utah | Varies | 0.3% – 7.3% | $47,000 |
| Vermont | 1.0% (for most employers) | 0.4% – 5.4% | $14,300 |
| Virginia | 2.50% (plus add-ons) | 0.1% – 6.2% | $8,000 |
| Washington | Varies | 0.27% – 6.02% | $68,500 |
| West Virginia | 2.7% (for most employers) | 1.5% – 8.5% | $9,000 |
| Wisconsin | 3.05% for new employers with payroll < $500,000 | 0% – 12% | $14,000 |
| Wyoming | Varies | 0.48% – 9.78% | $30,900 |
See also
- Unemployment insurance
- Unemployment insurance fraud
- Unemployment insurance fraud recovery
- Unemployment taxes
- Unemployment Trust Fund
- Unemployment filings during the coronavirus (COVID-19) pandemic, 2020-2021
- State government plans to end federal unemployment benefits related to the coronavirus (COVID-19) pandemic, 2021
External links
Footnotes
- ↑ Washington Legislature, "Washington State's Experience Rating System," accessed May 25, 2021
- ↑ 2.0 2.1 2.2 APS Payroll, "SUTA WAGE BASES," accessed March 9, 2024
- ↑ 3.0 3.1 3.2 Patriot, "What Is My State Unemployment Tax Rate?" accessed July 8, 2021 Cite error: Invalid
<ref>tag; name "patriot" defined multiple times with different content - ↑ Paycom, "SUTA Tax Rate 2024: All You Need to Know," accessed March 6, 2024
- ↑ Dependent on employer's experience rating.
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